Lawsuit lowers Newburgh Mall taxes

Sunday

Feb 3, 2013 at 2:00 AM

TOWN OF NEWBURGH — Newburgh's tax base is suddenly slimmer.

Jessica DiNapoli

TOWN OF NEWBURGH — Newburgh's tax base is suddenly slimmer.

The Newburgh Mall, one of the town's largest taxpayers, in January settled a lawsuit that sought to significantly lower its assessment. The mall secured a tax assessment reduction of about 30 percent dating back to 2008 and that sets its fair market value for this year at $26.8 million.

That means that the town, Orange County and the Newburgh School District will have to refund the mall's owners about $1.2 million for the years the property was overassessed, said M. Allan Hyman, the attorney who represented the mall in the lawsuit.

The money the town, county and school district will repay will be proportional to what they collected, Hyman said.

The lower assessment also means that the mall will pay less in taxes. The settlement came early enough in January that the mall received revised tax bills based on its new assessment, Hyman said.

In the town and county, the mall will pay about $108,000 less in its 2013 taxes, according to tax bills.

The Newburgh Mall is in foreclosure, though it is unclear whether the assessment reduction will have an effect on that proceeding. The attorney for Wells Fargo, which began the foreclosure early last year, declined to comment.

The attorneys in the foreclosure case postponed a meeting date that was scheduled for Jan. 30. A receiver, an attorney who collects rents from the mall's tenants, was appointed last year. Rents for December totaled close to $400,000, according to a copy of the rent roll.

Wells Fargo is entitled to the rents, according to the complaint. When the foreclosure lawsuit was filed in January 2012, the mall had not made full payments on a $31.6 million mortgage for at least three months. The balance was $31.2 million at the end of 2011.

The settlement sets the mall's fair market value at $26.8 million, said Cathy Drobny, the attorney working for Newburgh in the case. Unless the mall makes significant renovations, that value sticks for the next three years, regardless of who ends up owning it, she said.

The mall wanted its assessments lowered by 75 percent when it filed the lawsuit in 2008. That would have put the mall's value at $9 million this year, according to figures Drobny provided.

The mall has struggled with high vacancy rates in the past. But, things may be looking up.

Debbie Gaito, a specialty leasing representative for the mall, expects to have a new store open in the vacant Old Navy space by April. H&R Block, a seasonal tenant, recently opened near Sears, and the Newburgh Free Library Town Branch renewed its lease, Gaito said in an email.

The town's tax base will shrink even more once the sale of the Roseton and Danskammer power plants is finalized. Dynegy, the plants' current owner, is selling both to pay off debts in bankruptcy.

The assessment for Roseton, the more valuable of the two, must be decreased by at least half before the deal closes, according to the sale document. The reduction can be phased in over a few years.

Danskammer's buyer, a Phoenix company, plans to demolish the coal-fired plant, a move that will significantly devalue the property and likely lower its assessment.